VERDICT: Performance is average, but great handling and plenty of charm set the little Peugeot apart.

RATING: three *** (out of five)

Adding European style to typical hatchback versatility, Peugeot's 205 Si was immediately and impressively successful on its arrival in Australia in late 1991.

The fact that it came only as a two-door did nothing to hinder its acceptance by buyers desperate to drive something a little different without having to stretch the budget. For the first time in many years, buyers of small cars could choose one that was not Japanese.

For the previous four years, the only 205 in Australia was the potent GTi - it was easier for Peugeot to justify a high asking price for arguably the world's best "hot hatch" in the late '80s.

Exchange rates of the time would have put a premium of perhaps 20 per cent on lesser variants of the little Pug, making them hard to sell against the Ford Lasers, Nissan Pulsars and Toyota Corollas of the time.

But in '91, in the context of the rising yen, European cars gained a new cost competitiveness in Australia. Peugeot Concessionaires Australia brought in the 205 Si and positioned it directly against the Toyota Corolla.

In this market segment, engine performance is not generally a high priority - another negative that Peugeot overcame, because the Si's performance was borderline average.

The 1.6-litre, four-cylinder engine was not particularly quiet, smooth or refined, although it gave excellent fuel economy. Its single overhead camshaft with just two valves per cylinder put it well behind the Corolla on the technology front.

Buyers didn't care. Within six months of its launch, the Si was almost commonplace in the more tasteful Sydney suburbs. Clever marketing of this bargain-basement Pug as the "hatchback of Notre Dame" capitalised on its French origins.

Standard equipment included air-conditioning, power steering, central locking and power windows, giving it a substantial specification advantage over comparably priced Japanese cars.

Build quality and finish were, however, well off the pace. The paintwork lacked lustre and "orange peel" effect was evident, particularly with the solid colours. Some of the plastics used in the interior exuded a cheap feel and dashboard squeaks were evident from early in the piece.

Fit and finish inside the car may not have been to Japanese standards, yet there was a certain amount of style and charm. The driving position was especially good and all-round vision was excellent. Despite the 205's very compact dimensions, there was surprisingly ample passenger space.

There was no doubt that the European character of the car appealed to many buyers interested in making an automotive fashion statement, but the 205 Si was also quite a responsive little car to drive.

Magnificent power steering, which made parking effortless while providing good feel, was a highlight. The ride - helped by a longish wheelbase as well as Peugeot's suspension expertise (today, it is the only manufacturer to design and produce its own shock absorbers!) - was surprisingly supple and quiet for an inexpensive car.

Comfortable seats, strong brakes and sharp handling were other trademark Peugeot attributes. Plainly not in the GTi's performance league, the base Peugeot was still very satisfying to drive.

The plastic dashboard and glovebox almost certainly will have developed squeaks, many of which can be fixed with deft application of silicone spray.

Generally the 205 Si has been very durable. In high-mileage cars, wear in the ball joints advertises itself with a knocking noise from the front suspension.

The toothed rubber timing belt must be changed at regular intervals: if it breaks, expensive engine repairs will be almost inevitable (some Japanese cars such as Toyotas take a more fail-safe engineering approach).